DE Shaw and Its Uncertain Future

DE Shaw has had some issues in the recent past. Daniel Michalow, one of DE Shaw’s managing directors, was fired amid allegations of inappropriate behavior with female colleagues. This incident led to a closer look at how DE Shaw has had such an aversion to communicating with those outside the firm, that they looked guilty of covering up behavior that is not consistent with normal hedge fund behavior.

Due to this, DESCO has put some stern approaches to moving forward. They have required employees to sign a non-compete clause. If they choose to not sign, then they will be fired. The purpose for this change is an attempt to become more compliant with normal hedge fund practices.

The timing of the directive is interesting because it is the same date that DanieI Michalow’s “restrictions on interference” expires in his employment contact. At that point, he would be able to pull employees over from DE Shaw that are not willing to sign the directive. They claim the timing of this is purely coincidence. Those that have seen internal correspondence can see that DE Shaw is not working hard at having its employees sign the non-compete directives.

The leadership at DE Shaw is showing some signs of strain. It has been reported that at a meeting with the managing directors, leadership went so far as to ask for a pledge of loyalty from the group. This of course begs the question about what is happening. Surely if a number of people leave and go to work with Michalow, or somewhere else, DESCO could suffer. All of this could make investors somewhat concerned and nervous, which of course would have a negative impact on the company.